UK rates return to pre-pandemic levels

The Bank of England raised interest rates for a second consecutive month in March, bringing them back to pre-pandemic levels.


  • The MPC increased the base rate by 0.25 percentage points to 0.75%
  • Policymakers voted by eight to one in favour of the increase
  • The CPI rate hit 5.5% YoY in January – a 30-year high

The Bank of England (BoE) raised interest rates for a second consecutive month in March, bringing them back to pre-pandemic levels. Policymakers voted by eight to one in favour of an increase of 0.25 percentage points, raising the key base rate to 0.75%. The decision was widely expected by investors.

“BoE officials believe that inflation could rise above 8% during the second quarter of 2022”

The central bank remains concerned about inflationary pressures: the UK’s annualised rate of consumer price inflation rose to a 30-year high of 5.5% in January, and there are fears that Russia’s invasion of Ukraine will continue to disrupt supply chains and provide further impetus for price increases in raw materials and energy. BoE officials believe that inflation could rise above 8% during the second quarter of 2022. The Monetary Policy Committee (MPC) said that “some further modest tightening … may be appropriate in the coming months, but there are risks on both sides of that judgement depending on how medium-term prospects for inflation evolve”.

The British Chambers of Commerce (BCC) described the decision to raise rates as “ill-timed against a backdrop of growing domestic and global headwinds” and warned that it could risk “intensifying the headwinds facing the UK economy by damaging confidence”. The Confederation of British Industry (CBI) commented: “The MPC … will be walking a tightrope in the months ahead, having to both keep price pressures in check and manage the impact of tighter monetary policy on economic growth”.